During the 1997 Asian financial crisis, Thailand’s baht was devalued after its fixed exchange-rate system collapsed.
On July 2, 1997, Thailand abandoned its baht peg to the U.S. dollar and allowed the currency to float. The baht then fell sharply, helping trigger a regional crisis that spread through financial markets and currencies across East and Southeast Asia.
Thailand had accumulated large foreign-currency debts while maintaining the exchange-rate system. Property and stock-market speculation had also expanded rapidly. When investors lost confidence, the central bank could no longer defend the baht indefinitely using its foreign-exchange reserves.
The turmoil spread to Indonesia, Malaysia, South Korea, and elsewhere. The International Monetary Fund organized major assistance programs, especially for Thailand, Indonesia, and South Korea. The crisis caused recessions, corporate failures, and political upheaval, but affected countries differed in the severity and timing of their market declines.